The CEO of MTN Nigeria, Mr. Carl Toriola, has expressed concern regarding the latest proposal by the National Assembly to reintroduce a 5% excise tax on telecommunications and related services, such as gaming and betting, warning that such a move could critically damage the telecom sector in Nigeria, which is already grappling with significant financial challenges.

He likened the potential impact to the demise of the former national carrier, NITEL, highlighting that the industry is on the brink of collapse.

Background on the Excise Tax Proposal

The proposed 5% excise duty is part of broader efforts by the National Assembly to reform Nigeria’s tax system through a new “Nigeria Tax Act.” The legislative body aims to overhaul existing tax laws and consolidate various tax frameworks. However, this proposal has met resistance from stakeholders in the telecom industry, who argue that the sector cannot sustain additional financial burdens.

The excise tax had previously been exempted under former President Muhammadu Buhari, who argued that it would worsen the economic difficulties faced by Nigerians. In line with this, President Bola Tinubu issued an Executive Order upon taking office that suspended the tax, recognizing the financial strain it could impose on consumers and the industry.

“Something Drastic Will Happen” – Toriola’s Stark Warning

During a recent interaction with Cohort 3 of the MTN Media Innovation Programme (MTN-MIP) Fellows at MTN’s office in Ikoyi, Lagos, Toriola expressed his concerns about the reintroduction of the tax, warning that the lawmakers pushing for it are “playing with fire.” He emphasized that the sector, which contributes over 15% to Nigeria’s GDP, is being pushed toward a dangerous tipping point.

“Make no mistake about it, there is no way you’ll treat a sector that is adding over 15 percent to the GDP the way the telecom sector is being treated in Nigeria,” Toriola said.

He noted that the current financial state of the industry is dire, with operators struggling due to the severe devaluation of the naira and existing economic pressures.

Telecom operators’ attempts to review tariffs had been resisted by the Nigerian Communication Commission (NCC) on the grounds of the country’s current economic hardship.

Toriola also revealed that the companies are now dipping into their financial reserves to stay afloat, which he warned would not last much longer. Without a tariff adjustment, he said, the sector would face shutdowns, drawing a parallel to the collapse of NITEL, Nigeria’s former telecommunications monopoly.

“Some fundamentals have to change or something drastic will happen. MTN and the entire industry are in a dire situation,” Toriola stressed. “We are all making losses because of the naira devaluation. There should be no delusion. If the tariff doesn’t go up, we will shut down. Already, we are regressing the way of NITEL and it is a matter of time; the country could be without any telecom operator.”

USSD Debt Remains a Persistent Issue

Addressing another ongoing challenge in the telecom industry, Toriola provided clarity on the Unstructured Supplementary Service Data (USSD) debt owed by banks to telecom operators. He refuted rumors that the banks have been gradually settling the debt, disclosing that it has actually increased beyond N250 billion.

The USSD debt issue has strained relationships between the telecom and banking sectors for several years. Despite ongoing meetings between regulators—the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN)—to find a resolution, the debt continues to grow.

Toriola noted that telecom companies would consider withdrawing USSD services to banks only as a last resort, should regulatory efforts to resolve the issue fail.

“Regulators of both sectors, the Nigerian Communications Commission, NCC, and the Central Bank of Nigeria, CBN, are constantly meeting to see a lasting solution,” he said.

Implications of the 5% Tax on the Telecom Sector

With the growing pressure from the country’s economic downturn, analysts and industry experts have warned that the proposed 5% excise tax would put the telecom sector in a precarious situation.

Although the NCC has resisted attempts at tariff review, analysts warned that the implementation of the excise tax will force telcos to increase tariffs. This they said is likely going to lead to higher service costs, which could be passed on to consumers, compounding the financial burden on a population already struggling with rising living costs.

Telecom operators like MTN, Airtel, Glo, and 9mobile have continuously invested in infrastructure to expand network coverage, despite facing high operational costs driven by factors such as diesel price increases, multiple taxation, and regulatory fees.

Moreover, the government has been reminded that the sector’s financial health is crucial, not only for telecommunications but also for the broader economy. The industry supports millions of jobs, including direct employment and ancillary services, and plays a vital role in driving digital transformation in Nigeria. In addition, the telecom industry has served as the country’s economic cash cow, particularly during COVID-19 – when the global economy took a hit.

Against this backdrop, telecom operators, industry experts, and consumer advocates are calling for the excise tax proposal to be reconsidered.

Mark Zuckerberg, co-founder of Facebook and current CEO of Meta, recently shared his perspective on the importance of having a tech-savvy leadership team in today’s rapidly evolving tech industry.

During an appearance on the Acquired podcast, Zuckerberg emphasized that companies that consider themselves technology-driven should be led by CEOs and senior executives with substantial technical expertise to truly thrive.

Reflecting on the key factors that have contributed to Meta’s growth, Zuckerberg highlighted the critical role of having a leadership team that not only understands product development but also embraces technological innovation as core to the company’s identity. According to him, Meta’s success can be attributed to maintaining a strong balance between product innovation and technological leadership.

“I think that that’s something that we’ve held ourselves to and built a good organization around,” he remarked, indicating that Meta’s structure emphasizes technical knowledge and development throughout its organizational hierarchy.

Zuckerberg did not shy away from critiquing what he views as a common flaw in many so-called tech companies—namely, the lack of technical proficiency among their leadership. Drawing from his early experiences in Silicon Valley, he described a recurring scenario where firms identified as technology companies lacked leadership teams with technical expertise.

“The CEO wasn’t technical, the board of directors had no one technical on it. They had one dude on the management team who was the head of engineering, who was technical, and everyone else wasn’t,” Zuckerberg recounted, noting that such companies, despite their potential success in certain aspects, could not genuinely be considered tech firms unless a significant portion of the leadership possessed strong technical acumen.

He suggested that firms claiming to be tech-oriented need more than just one or two technical roles at the top. Instead, they must cultivate a culture where technical understanding permeates the senior leadership, allowing them to drive innovation and adapt to rapid technological advancements.

The Meta vs. Apple Approach

In the interview, Zuckerberg also drew comparisons between Meta and other tech giants, notably Apple, to illustrate different approaches to product development. Apple is known for taking its time to perfect products before launch, while Meta has cultivated a culture that values agility and rapid iteration.

Zuckerberg pointed out that Meta has consistently embraced a more reactive approach: “We have a culture that values shipping and getting things out and getting feedback,” he said.

He admitted that this mindset sometimes brings Meta close to “the line of being embarrassed about what [it] put[s] out,” but stressed that this approach has proven valuable for the company’s growth.

Learning from Competitors and Embracing Feedback

Beyond advocating for tech-savvy leadership, Zuckerberg emphasized the importance of being open to external insights, warning companies against overprotecting their pride.

“There are more smart people outside of your company than inside your company,” he said, underscoring the need for businesses to stay humble and learn from the successes and failures of others. He suggested that companies often gain valuable insights from observing rival firms’ strategies and outcomes.

Navigating Emerging Trends like AI

Zuckerberg’s insights come at a time when many companies are grappling with the rapid advancement of technologies such as artificial intelligence (AI), which requires quick adaptation to maintain competitiveness. He indicated that innovation should not just be about pushing the envelope with new technologies but also about having the right leaders who understand these advancements well enough to guide strategic decisions.

His views echo a growing trend among some tech giants to elevate engineers and product developers to senior leadership roles. For instance, companies like Google and Microsoft have appointed leaders with deep technical backgrounds—such as Sundar Pichai and Satya Nadella, respectively—who have played pivotal roles in shaping their companies’ focus on AI and cloud computing. This aligns with Zuckerberg’s argument that a solid grasp of technology at the leadership level is essential for companies to thrive in today’s market.

At Meta, Zuckerberg has practiced what he preaches, ensuring that the company’s leadership team is infused with technical expertise. His background as a coder who co-founded Facebook in a dorm room informs his hands-on approach to technological leadership. Furthermore, Meta’s focus on emerging technologies, such as virtual reality, augmented reality, and AI, reflects a deliberate strategy to stay ahead of the curve by fostering a culture of technical innovation.